Ellis issues 7.0%, five-year bonds dated January 1, 2015, with a $580,000 par va

Question

Ellis issues 7.0%, five-year bonds dated January 1, 2015, with a $580,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $604,741. The annual market rate is 6% on the issue date. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.)

Ellis issues 7.0%, five-year bonds dated January 1, 2015, with a $580,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $604,741. The annual market rate is 6% on the issue date. (Table B.1, Table B.2, Table B.3, and Table B.4) (Use appropriate factor(s) from the tables provided.)

1. Compute the total bond interest expense over th e bonds' life. Total bond interest expense over life of bonds: Amount repaid: 10 payments of Par value at maturity Total repaid Less amount borrowed Total bond interest expense 20,300 $ 203,000 580,000 783,000 604,741 $178,259

Explanation / Answer

1. Bond Interest expense

2. Amortization table

3.

Interest payment on June 30 and Dec 31 is as recorded below:

4. Bond issue price

Total bond Interest Expense over life of bonds: Amount repaid: 10 semi-annual Interest payment of 20,300 203,000 Par value of maturity 580,000 Total repaid 783,000 less: amount borrowed 604,741 Total bond Interest Expense 178,259

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.